nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2021‒10‒04
five papers chosen by
Marek Giebel
Universität Dortmund

  1. Epidemic exposure, financial technology, and the digital divide By Saka, Orkun; Eichengreen, Barry; Aksoy, Cevat Giray
  2. Making digital transformation work for all in Chile By Paula Garda
  3. Cyber Capacity Building in the Canadian Arctic and the North By Csenkey, Kristen; Perron, Bruno
  4. Absorptive capacities and economic growth in low and middle income economies By Muhammad Salar Khan
  5. The Pro-Trade Bias of Offshoring By Bandyopadhyay, Subhayu; Basu, Arnab K.; Chau, Nancy H.; Mitra, Devashish

  1. By: Saka, Orkun; Eichengreen, Barry; Aksoy, Cevat Giray
    Abstract: We ask whether epidemic exposure leads to a shift in financial technology usage and who participates in this shift. We exploit a dataset combining Gallup World Polls and Global Findex surveys for some 250,000 individuals in 140 countries, merging them with information on the incidence of epidemics and local 3G internet infrastructure. Epidemic exposure is associated with an increase in remote-access (online/mobile) banking and substitution from bank branch-based to ATM activity. Heterogeneity in response centers on the age, income and employment of respondents. Young, high-income earners in full-time employment have the greatest tendency to shift to online/mobile transactions in response to epidemics. These effects are larger for individuals with better ex ante 3G signal coverage, highlighting the role of the digital divide in adaption to new technologies necessitated by adverse external shocks.
    JEL: G20 G59 I10
    Date: 2021–09–28
  2. By: Paula Garda
    Abstract: The sanitary crisis, created by the outbreak COVID-19, is accelerating Chile’s digital transformation, which has seen a surge in e-learning, streaming, online shopping and marketing and teleworking. The digital transformation has the potential to revamp productivity and inclusiveness, although it comes with adoption barriers and transition costs. Connectivity has increased substantially in the last decades, and the country is ahead of the region. However, fixed high-speed broadband adoption, essential for the digital transformation, lags behind. Firms have started to adopt digital technologies but micro firms and SMEs are well behind. Rural areas have lower connectivity and many workers lack the skills to thrive in the digital world. Lowering the entry barriers in the communication sector and making regulations simpler and clearer would ease infrastructure deployment. Targeted policies for SMEs, such as development of sources of financing or specific programmes for adopting digital tools, would help them access and use digital tools, increasing productivity. Reforms to the innovation ecosystem, competition and the regulatory framework are also needed. To reap the benefits of digitalisation for all, it is necessary to continue investing in quality foundational skills, adult and lifelong learning and in high-skilled ICT specialists. Labour market policies need to be adapted to face the challenges and exploit the benefits posed by the digital transformation. An effective safety net would address possible labour market disruptions.
    Keywords: Chile, connectivity, digital transformation, labour market, productivity, skills
    JEL: D24 J24 J08 I28
    Date: 2021–10–05
  3. By: Csenkey, Kristen; Perron, Bruno
    Abstract: The Canadian Arctic cyber domain is set to rapidly expand in the next decade with emerging security vulnerabilities that would benefit from a multi-stakeholder Arctic Cyber Security Ecosystem. Great power competition will affect the Arctic as the United States, Russia, and now China seek to influence the resource rich region. Cyber is not only a matter of defence, but it is interconnected with education and economic development. The threat of disinformation is an example of how new ways of warfare can impact Canada through the Arctic. Cyber capacity building (CCB) could include domestic cyber education, skills training, and investment in scientific and technical (S&T) and information technology (IT) infrastructure. A focus on CCB would need to foster growth of resources available to territorial governments and local communities, hardening the region’s cyberspace and support incident response to malicious cyber actor activity. Information technology security (ITSEC) resources need to be combined with community-based media literacy and critical thinking education programs to increase the region’s resilience to malign influence.
    Date: 2020–10–27
  4. By: Muhammad Salar Khan
    Abstract: I extend the concept of absorptive capacity, used in the analysis of firms, to a framework applicable to the national level. First, employing confirmatory factor analyses on 47 variables, I build 13 composite factors crucial to measuring six national level capacities: technological capacity, financial capacity, human capacity, infrastructural capacity, public policy capacity, and social capacity. My data cover most low- and middle-income- economies (LMICs), eligible for the World Bank's International Development Association (IDA) support between 2005 and 2019. Second, I analyze the relationship between the estimated capacity factors and economic growth while controlling for some of the incoming flows from abroad and other confounders that might influence the relationship. Lastly, I conduct K-means cluster analysis and then analyze the results alongside regression estimates to glean patterns and classifications within the LMICs. Results indicate that enhancing infrastructure (ICT, energy, trade, and transport), financial (apparatus and environment), and public policy capacities is a prerequisite for attaining economic growth. Similarly, I find improving human capital with specialized skills positively impacts economic growth. Finally, by providing a ranking of which capacity is empirically more important for economic growth, I offer suggestions to governments with limited budgets to make wise investments. Likewise, my findings inform international policy and monetary bodies on how they could better channel their funding in LMICs to achieve sustainable development goals and boost shared prosperity.
    Date: 2021–09
  5. By: Bandyopadhyay, Subhayu; Basu, Arnab K.; Chau, Nancy H.; Mitra, Devashish
    Abstract: Technological advance and improvements in communication technologies have facilitated the offshoring of jobs worldwide, where a typical scene following the supply chain involves developing countries importing finished products from developed countries that contain developing country labor content. We demonstrate that this pattern of offshoring can harbor a pro-trade bias, but only among countries upstream along the global supply chain. This upstream-downstream asymmetry has important implications on countries’ (i) incentive to violate trade agreements, and (ii) ability to leverage the dispute settlement procedures to punish violators. We then show that a well-enforced set of labor standards in developing countries, such as a binding minimum wage, resolves this conundrum by reviving the ability of the developing countries to use countervailing tariffs to punish trade agreement violators.
    Keywords: Labor and Human Capital
    Date: 2021–09–01

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